Industry Updates

ETF Wrap: Active ETF expansion accelerates

Further new entrants and listings in active ETFs, a race in fees and flows and fund selectors returning to China made headlines this week

Jamie Gordon

This week saw the fervour surrounding active ETFs continue as new products, listings and issuers entered the space.

Milan-based Eurizon Capital announced it would be entering Europe’s active ETF market and is currently awaiting approval to launch a strategy targeting the UK market.

The asset management arm of Intesa Sanpaolo currently manages around €392bn across its suite of active mutual funds.

Elsewhere, AXA Investment Managers and BNP Paribas Asset Management listed active ETFs on Euronext Paris, the first providers to so following rule changes to allow active ETF listings in France by the Autorité des Marchés Financiers (AMF).

These updates came after BlackRock caused a stir before Easter, with the launch of its first active equity ETFs – the iShares World Equity High Income UCITS ETF (WINC) and iShares US Equity High Income UCITS ETF (INCU) on Euronext Amsterdam and Deutsche Boerse last week.

Fees not everything

Next, the iShares Core S&P 500 UCITS ETF (CSPX) topped European ETF flows in Q1, despite its 0.07% headline fee being more than double the SPDR S&P 500 UCITS ETF’s (SPY5) 0.03% expense ratio.

BlackRock’s candidate pulled in $4.7bn new assets in Q1, ahead of the still impressive $3.4bn amassed by SPY5, likely owing to advantages offered by its scale – such as greater investor familiarity and tighter bid-ask spreads.

However, SPY5 has been a real success story in recent months, with assets under management (AUM) surging from $5bn to $12.5bn since its fees were slashed last October.

China not uninvestable

Finally, China’s long road to recovery presents “interesting” tactical opportunities which firms such as Pacific Asset Management are capturing through ETFs.

The firm’s CIO Will Bartleet, told ETF Stream the softening of ‘three red lines’ debt rules have boosted the country’s ailing property sector. Meanwhile, respite from regulatory clampdowns, has supported a comeback in Chinese tech equities.

Targeting these opportunities, Pacific AM has tactical positions in the Tabula Haitong Asia ex-Japan High Yield Corp USD Bond ESG UCITS ETF (TAHY) and the HSBC Hang Seng Tech UCITS ETF (HSTC).

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